Good morning, and welcome to the Beazer Homes earnings conference call for the quarter ended September 30, 2013. Today's call is being recorded and a replay will be available on the company's website later today. In addition, PowerPoint slides, intended to accompany this call, are available on the Investor Relations section of the company's website at www.beazer.com. At this point, I will turn the call over to Carey Phelps, Director of Investor Relations. Ms. Phelps, you may begin.

Thank you. Good morning, and welcome to the Beazer Homes conference call, discussing our results for the fourth quarter and full year fiscal 2013. Before we begin, you should be aware that during this call, we will be making forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors, which are described in our SEC filings, including our Form 10-K, which may cause actual results to differ materially. Any forward-looking statement speaks only as of the date on which such statement is made. And except as required by law, we do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for management to predict all such factors. Joining me today are Allan Merrill, our President and Chief Executive Officer; and Bob Salomon, our Executive Vice President and Chief Financial Officer. Following their prepared remarks, we will take questions in the time remaining. I will now turn the call over to Allan.

Thank you, Carey, and thank you for joining us. 2013 was an important year for us. We exceeded virtually every one of our operational and financial targets as we positioned the company for significant growth in the years ahead. The success of our path-to-profitability strategies was magnified by a recovery in both consumer demand and home prices, allowing us to reach our profitability target far sooner than we had originally expected. On the call this morning, I'll summarize the highlights of both the fourth quarter and the fiscal year, as well as the progression of improvements in our path-to-profitability metrics that have made such a big difference in our results over the past 2 years. At that point, I will turn the call over to Bob. He is going to walk you through our land spending and our estimates for future community counts, which is one area where we know we still have a lot of work to do. After he's done, I'm going to re-set our longer-term financial targets and share our expectations for fiscal '14 before we open the call for your questions. Starting with the quarter's results. We generated positive net income of $11.9 million for the fourth quarter, making us profitable for both the 3- and 6-month periods ended September 30. This is the first time we've been profitable from operations in any 6-month period since 2006. For the quarter, we increased adjusted EBITDA to $41.5 million from $15.1 million last year, grew orders by 7% and closings by 3% despite a headwind of a 17% decline in average community count. We improved sales per community per month to 3 compared with 2.3 last year and decreased our cancellation rate by 720 basis points. We also expanded gross margins by 420 basis points to 21.4% and…

Thanks, Allan. As you probably have noticed, Allan got to cover all the fun stuff, pointing out the tremendous improvements we've made on most of our operational and financial metrics. I say most, because there's 1 key metric where we have yet to make progress, and that is growing our community count. Gradually growing our community count was always part of the path to profitability, but we waited to start buying land until 2 things happened. First, we wanted to demonstrate that we could operate our existing communities more successfully before going on a buying binge; and second, we chose to raise equity in 2012 to provide the growth capital. As part of that fundraising, we told investors it would take some time to intelligently deploy the capital, and then, additional time before we had sales and closings to show for it. So with that as a backdrop, let's talk about our land spending and anticipated future community count. Our operational improvement and sales per community coupled with the latency associated with turning land spending into active communities, has contributed to a sharp reduction in community counts over the past 2 years. In fact, we ended the year a bit lower than we expected at 135 average active communities in Q4. But help is on the way. As planned, we dramatically ramped up land spending for 2013 to $475 million, up about $300 million from the prior year, and that doesn't factor in the additional land positions that we control through land banking relationships. These land banking partners have purchased or committed to purchase land parcels totaling in excess of $120 million, which will be available to us to allow option take downs in the quarters ahead. While the increase in land spending hasn't led to community count growth yet,…

All right, thanks, Bob. Despite some softening in demand in recent months, the fundamentals for the homebuilding industry remain favorable. While homebuyers are having to adjust to the prospects of higher monthly payments, in light of higher home prices and higher mortgage rates, new home ownership still provides great value, compared to renting and in relation to incomes. Fundamentally, I believe we are in the midst of a multi-year recovery period. And although temporary hiccups are possible, either due to housing policy changes, general economic concerns or other factors, affordability in most of our markets remain strong, and inventories of new and used homes are low. Both of these factors provide us with a measure of confidence that new home prices and single-family starts will continue to grow in the years ahead. As I said at the outset, 2013 represented an important turning point for the company. We reached a key milestone in the fourth quarter when we reported our first profit from operations since 2006, and we fully expect to be profitable for the full year of fiscal 2014. While that is great news for our shareholders, our bondholders, our trade partners and for our employees, it creates a new challenge for us. After all, getting to profitability was always an interim objective, not the long-term best case scenario. For that reason, we've decided it is time to share our next multi-year financial objective, as well as the metrics by which our progress can be measured. In simple terms, we've replaced the path to profitability with a new objective with its own catchy acronym 2B10. It stands for reaching $2 billion in revenue with an EBITDA margin of at least 10%. Like the path to profitability, it won't happen in a single year, but also like the path to…

[Operator Instructions] Our first question does come from Ivy Zelman of Zelman & Associates. Ivy Lynne Zelman - Zelman & Associates, LLC: You gave us a lot of good information, Allan, and on your outlook and your expectations. Can you just dig down a little bit more into the current trends and maybe talk a little bit about what you saw in October? Traffic orders came in better than we were expecting and are we starting to finally see the consumer coming back after the sluggish months throughout the summer? Are you feeling more optimistic in some of the activities you've been recently experiencing? And, obviously, your sales per community were stronger than many of the other builders in the market, so I don't know if that's concession, a little bit driven or just give us some color please.

Sure. Let me talk about the fourth quarter, and then I'll make a short comment about October. The fourth quarter started flattish. July didn't feel very good, didn't feel terrible, but it wasn't what we were hoping for, and then August was really not very good. We got a couple of weeks into August and it felt like this slowdown, this seasonal issue that is normal had been exacerbated by what people have called payment shock or sticker shock. And we decided to do something about it. So we put our heads together, and we repackaged in every community, the incentives that we were offering and got very promotional in September. Now I say that we didn't actually make big changes in the economics of our transactions, but we repackaged things. Instead of stainless steel appliances, it was granite countertops; instead of a flooring package, maybe it was an upgraded bathroom, but really trying to target specific opportunities at each community. And I have to say that the results of that freshening up of our selling activity really beat our expectations in September. We had a terrific September. So on balance, the quarter ended up a little bit better than we might have hoped for, but I think it's because we got pretty aggressive in our marketing proposition but not so aggressive on what I would call margin killers. Was it $100 here, $400 there. I'm sure it was, but it was really not a capitulation quarter, where we tried to drive sales, margins be damned. In October, I'm pleased that we've got 16 divisions, 13 of our divisions were kind of at their plan level for October. Three are a little bit behind, but on balance, we feel okay. Cautious. This time of the year, there are a couple…

I think it's perception, Ivy, I really don't think it's affordability. I think that it's psychology and perception. I mean, there's no question that if you were looking at pricing a new home in the fourth quarter and looking at that monthly payment, it was a lot higher than it had been 6 or 12 months before. And so there's kind of a schmuck factor, where the buyer says, "Gosh, this doesn't feel very good." But when you have the longer discussion with the buyer, and in that period of time they were longer discussions, and you asked them, "Do you interest rates are, directionally, over time, headed higher or lower? And do you think home prices, directionally, are headed higher or lower?" They kind of get themselves around to the fact that this is an adjustment that they need to make. And then our discussion has been around where are monthly payments in relation to rents, and where are they in relation to incomes. Because to the extent that they're up, that's a factor, but to the extent that they're still at attractive levels of income, that's a better factor, and to the extent that it's less expensive to be an owner on a pretax basis than to be a renter, that's even better. So I think that's really the discussion. And I will tell you, I was incredibly gratified. One of our new home counselors said to me in September, and it was like the light bulb had gone off with her, she said, "You know, it doesn't help to throw money at a problem. They need to feel good about the purchase decision they're making. And, actually, increasing cash incentives wouldn't work. From her lips to God's ears, but I have to say, I was encouraged by that, and that really governed how we behaved in the quarter.

Our next question does come from Michael Rehaut of JPMorgan. Michael Jason Rehaut - JP Morgan Chase & Co, Research Division: Just to -- quickly, just clarify from your response to Ivy's question about kind of repackaging incentives and getting a little more aggressive in marketing and combine that comments that you don't expect them really to be margin killers, roughly similar economics. You also gave the guidance for 20% to 21% gross margin in fiscal '14 off of 20% in '13, so are we to expect kind of a gradual or consistent margin expansion throughout the year? And that is also based on even what you've done in September?

Thanks for asking, Mike. It's a good question. I think one of the things that we struggle with. And I haven't been very good at, historically, on these calls is trying to articulate the complexity of sequential margins and year-over-year margins. And one of the things I did, and this is going to make people's heads explode. You won't want to hear it, but I'm going to do it anyway. We went back and I analyzed what the change in margins quarter-to-quarter was over the last 4 or 5 years. And what's amazing, both up and down, the average change sequentially in gross margins for our company has been about 1.8%. So to say that it has been volatile period is an understatement. And trying to understand that and understand the mix, the geography and the buyer profile mix that sort of rolls through our company, and then trying to make reasonable, not sandbagging, but not irresponsible projections about the future on a quarterly and an annual basis, it's really pretty challenging. So what we're confident in, as we look at backlog, as we look at our selling and pricing strategies is that margins can be nicely above in '14 what they were in '13. So ending at 20% for the full year, we feel pretty good about 21-plus during the year. Now the progression of that, I feel actually pretty good that in Q1 and Q2 into Q3, we have a very good chance at year-over-year quarterly positive comps. But I would tell you that the margin for error on a sequential basis is sufficiently high that I get scared trying to make that forecast. So I don't know if that helps, but that's kind of how I am trying to do better at articulating this, and hopefully, that gives you a little bit more to work with. Michael Jason Rehaut - JP Morgan Chase & Co, Research Division: No, I appreciate that Allan. And I guess just a couple of technical questions. First, you mentioned that there was a little bit of additional expense in the SG&A this quarter. I was wondering if you could break out the dollar amount there to get a sense of what the underlying SG&A was or the -- more the ongoing, let's say -- and you also referred it, or it might've been Bob that referred to the interest expense more being capitalized. With a view of roughly mid-teens revenue growth, I was hoping to get a sense of what the interest amortization expense could be, roughly, in '14. I believe it was $41 million in '13.

Okay. So I'm going to let Bob get all over interest expense. He's excited to talk about that. Let me talk about G&A for just a second. We settled and increased reserves on a couple of long-standing construction warranty-related issues during the quarter. And I think a round number of about $3 million is appropriate. Those are non-recurring, and I think you can take those out when you think about run rates in G&A. All right, so Bob?

So Michael, the all fun topic of capitalized interest. If you think about this year and, really, you can kind of benchmark us to our peers, we expect somewhere in 80% to 90% range of total cash interest expense. And remember, with our issuance of our 2021 notes late September, our cash interest expense is going to go up to about $120 million next year. So I think the way to think about it, with the continued spend in our inventory, as we grow the land base, to think about next year being somewhere in the 80% range of the cash interest expense that'll hit the income statement.

So I think just to clarify, Mike, you're talking about cap interest and cost of sales. And you know for us, that's about $40 million. And last year, there was about $60 million below the line. Michael Jason Rehaut - JP Morgan Chase & Co, Research Division: Yes, it's that interest expense amortization in COGS that I was referring to. That's right.

Yes, I think the interest expense through COGS will probably be a slight bit lower next year based on the higher inventory levels that we project. And then below the line, as we've talked about in the past, Mike, is kind of a mathematical equation, a bit based on the inventory that we have with the debt.

Our next question does come from David Goldberg of UBS.

My first question, Allan, on the 2B10 targets, now that you've achieved past $1 billion, I guess, I'll start to hit you up on the 2B10 targets, just giving you a hard time. So the community count growth that you're looking at, can I presume that, that basically assumes over the time frame that you think about implementing this and achieving it, the recovery remains relatively concentrated? And Beazer's kind of geographic footprint remains relatively concentrated in better locations -- A, B locations, however you want to define it? Such that -- that's what's driving most of the ASP growth, it's a concentration. And we're not really getting into more peripheral areas or more entry-level buyers with that?

No. You're absolutely right. First of all, footprint's not changing. We like the markets we're in, we did the hard work during the downturn, we left markets we weren't very good at, that we didn't think had a lot of potential. So we love our footprint, and we're growing in our footprint. And our buyer profile is moving just a little bit, but it's, basically, the geographic mix between our existing footprint that's driving the ASP more than anything. There's a little more California. There's definitely more of the Mid-Atlantic. And, frankly, the product that we are growing the fastest in both Florida and Texas is at higher prices than where we have historically been in some of our other markets. And so the mix within the company is really what's driving that ASP.

Got it. And then just to make sure I understand, if the mortgage markets were to loosen a little bit more than where they are now, I mean, obviously, we're very tight at this point, but if we were to see a bit of a loosening in the next couple of years, do you think that would change the 2B10 targets in terms of where you would project ASP to be?

Yes, I think if you loosen the mortgage market, it feels-- more money chasing scarce goods, I think prices would move faster to the upside, and we'd have to raise our EBITDA target.

Okay. That's really helpful. And then just as a quick follow-up here. When we look at the 2B10 targets, especially, on the SG&A side. And I understand we're kind of in an interim step, but how do you get to a 12% target versus a 10% target, close to where it's been historically? How do you get that interim step? How do we -- how do you kind of get your hands on that's the right place to be in the interim?

Well, honestly when you're thinking about an interim step, the ability to communicate clearly becomes crucial, and so the precision of 10% as an EBITDA margin arrived at by subtracting SG&A from a gross margin. We sort of looked at both parts, and said how do we get from 13.5% to 12%. We need to grow revenue for sure, and we've got to be unbelievably careful with the dollar increases in G&A that they are moving forward at a much lower pace than any revenue growth. As we rolled it out and what the different scenarios of future closings and different mixes of closings, I think we can get there. Let me be clear we're not going to get there in fiscal '14 in one step, but I think we'll take a pretty big bite at that this year.

Our next question does come from Dan Oppenheim of Crédit Suisse. Michael Dahl - Crédit Suisse AG, Research Division: This is actually Mike Dahl on for Dan. Allan, I actually wanted to follow up on your comment on the changing mix within your geographic footprint and just ask kind of a different way. As far as your 2014 targeted land spend, how are you thinking about capital allocation geographically or by product type?

Great question. Product type looks a lot like our current product type, really not a change there. And frankly, the '13 and the '14 allocation is also quite similar. I think our '13 numbers will show that we spent about 70% in 4 principal areas. California, Texas, Florida and the mid-Atlantic and I anticipate our fiscal '14 spend will be very similar to that. Now the mix within those is going to reflect clearly the availability of deals that meet our criteria. But if we ended up at the end of the year with between 2/3 and 3/4 of our capital incrementally invested in California, Texas, Florida and the Mid-Atlantic, I'd be very happy. Michael Dahl - Crédit Suisse AG, Research Division: Okay. And then just thinking about your community count here, could you break down what is, at this point, what's legacy, what's newly identified and what are the closeouts scheduled for next year versus the openings?

Yes. We don't have a great metric on that. And it's not obstinance, so it's just -- I got this whole No Community Left Behind Mindset. Every community is an important community. And I kind of hate creating the excuse, "Well, it's an old one or it's a new one." We bought it, we own it, damn it, we got to run it right. And so, I don't really think about it that way. What I can tell you is there are about 50 communities that have 40 or fewer lots left that would be the likely group from which closeouts would occur based on a sales pace of 3 a month during the year. Some will sell faster than that. Some will sell slower, so they're not all going to close out. But that's kind of the solution set, 50 to 60, I believe, that have a lot unit count remaining that we've kind of put them in that condition. Michael Dahl - Crédit Suisse AG, Research Division: Okay. And then, I guess, quickly, if I could follow up, since you brought it up, where do you stand on the No Community Left Behind progress?

Well, we feel great. I mean, our performing community ratio was 90%, which was under 10% sort of failing my NCLB list. And I have to say, I'm really, really happy that, that has been fully adopted into the culture. And people don't want to be on that list, and so, they don't get on the list by making changes in real time to stay off of it. I think that's one of the most important things that's happened in our company.

Our next question does come from Adam Rudiger of Wells Fargo Securities.

I guess, I'll just settle for second on a 2B10 question. When looking at the targets for the gross margins there. The 2014 target range isn't significantly different than the 2B10 range. And so, I'm just wondering what that -- if you think about -- not asking for specific guidance, but the longer-term trajectory -- land costs that flows to the income statement, things like that, just the multiyear trajectory for gross margins, we've heard different opinions from some of your competitors, so I was just curious what yours was.

So I sort of punted here, to be honest, because there are 2 things that are at play. One is what's going to happen to home prices, and what's going to happen to land prices. And we were in a period of time earlier this year, where clearly land prices move faster than home prices. And so if you're underwriting deals, you're looking forward saying, "Gosh, that doesn't look like margin expansion." Market got a little softer in the fall. If you were static in your view of home prices, and land prices were either not appreciating or, frankly, coming back just a little bit. Well, now all of a sudden, the prospects of deals in the future having slightly more margin pickup started to occur. So rather than really guessing at both of those, what we've said is we're going to shoot at 21% to 22% this year, and we're going to make our model work, our 2B10 targets on 22%, then if we get a situation where home prices move faster than land prices, we'll have an opportunity to take our next set of targets higher. Does that help?

I think so, yes. And then the other question I have was if you -- based on your projected land spend for 2014, do you think you'd be a net user or generator of cash?

We're definitely going to use cash.

We're going to use cash.

We're definitely going to use cash.

And then, I guess, going back to -- one more gross margin question. You talked about earlier before the unpredictability on a sequential basis. I mean that suggests you don't have a lot of visibility in your gross margins and backlog, is that correct? Or is it just the timing of closings that makes it confusing?

Yes, that's what happens. And when I say unpredictability, I mean, it's been, actually, until this last year, of course, it's been fairly commonplace that our Q4 margin was not the highest margin of the year. Well, it was in 2013. That was unusual. So when I say unpredictability, it's not so much that it is unpredictable when we're sitting 90 days out as it is when I sit 90 days out trying to guess what's going to happen between 2Q's out, 3Q's out and figuring out how the current selling environment does or doesn't fit the same pattern as in prior years. Because very often, for example, we've seen a reduction between Q2 and Q3 margins, and that largely, historically, had to do with Houston and Indianapolis that were lower-priced, lower-margin communities for us, having a larger share of their deliveries in that June quarter. That trend has changed a little bit as our mix, geographically, in the company is changing. And that's what makes it a little bit hard to do those sequentials.

Okay. And then for just lastly, on that same topic then, going back to the original question asked on the call about October or September and some promotions and marketing, things like that, should we expect relative stability in the December quarter?

Yes, I would be careful. And frankly, I'd guide people away from growing Q4 forward, because our target for the year is between 21% and 22%, but I feel very good. We'll be up very nicely in Q1 compared to Q1 last year. And I think that will be true in Q2 as well. So we're going to have these year-over-year progressions. I'm a little worried about the -- worried, because I don't want to be wrong by 20 or 30 basis points and then have everybody pulling their hair out, if we post what's a great number, but it was a few basis points lower than in the prior quarter.

Our next question does come from James McCanless of Sterne Agee. James McCanless - Sterne Agee & Leach Inc., Research Division: First question I had, on the average backlog price that's been up double digits for 3 quarters in a row now, how sustainable is that growth trend? And how does that play into 2B10?

Well, certainly a target in fiscal '14 of $275,000 to $285,000 in ASP is hugely influenced by having a backlog around $270,000. I mean that's not influenced by having a fiscal year '13 ASP of $250,000. So it plays a direct role, and we've had some slides in there, they're again in the appendix, Jay, where you can kind of see at every quarter what the backlog ASP was and how that related to subsequent quarters' delivery ASP. And there's a pretty good correlation. So when we look at that, and that's giving us confidence. Again, I think it reflects largely mix shift for us among and between our communities in our markets. So I think it plays dramatically into fiscal '14. As we think about $300,000 as an ASP target as a part of 2B10, I think that really reflects even further evolution of the capital allocation question, with 70% of our capital going into Texas, California, Florida and the Mid-Atlantic that for us have higher prices than most of our other markets. That's dragging that ASP up, not because we're, as I said, counting on price appreciation, because we don't put that in our forecast, but because the mix shift is really reflecting now where we're putting our money. James McCanless - Sterne Agee & Leach Inc., Research Division: Okay, great. And then the follow-up to that, tying on to the capital acquisition or capital deployment. With the 2 large land transactions we've seen in California over the last week, how does that influence your thinking about the spend you'd planned in that state? And could you maybe give us your take on those deals?

Well, I haven't studied them, so I couldn't really speak about the deals, but I would tell you, I happened to see one of them announce that they'd be selling $0.5 billion worth of assets as a result of the acquisition. And I could promise you, I'll be on their email before the day is out, just making sure that if that takes place that we're contacted. But we know who we are in California. We're not trying to be the absolute biggest. There are some markets, some corridors that we're very, very good in, and we've got a deep pipeline of prospects. And I would tell you I don't feel like our opportunity set has been crowded out or reduced by those headline transactions. I mean, those were owned by other builders yesterday. They're going to be owned by different builders tomorrow. In the meantime, there are opportunities that we pursue. And if something breaks loose as a result as of one of those deals, that would be extra. That would be fine.

Our next question does come from Alex Barron of Housing Research Center. Alex Barrón - Housing Research Center, LLC: I was hoping to, I guess, get a better handle -- I understand the margins are going to be up year-over-year, but given that market conditions are softer and the promotions, I mean, what -- I guess, 2 questions. One, what gives you the comfort that margins could increase sequentially into next year? Because it seems like more builders are being more promotional and cutting prices and stuff? And second, what gives you the comfort that the sales pace could improve, given that the mortgage rates are higher than where they were at the first half of this year?

Let me take your second question first. When I think about our sales pace for the year, we were as you know, at about 2.9, and how we got there just to kind of play back history. Here were our sales per community per month for the 4 quarters of fiscal '13. 2.1 in Q1, 3.4 in Q2, 3.2 in Q3 and 3.0 in Q4. I think we can do better than 2.1 in Q1. I'm counting on it. We're a different company a year later. I think when we get into the spring selling season, we'll have a hard time, and in fact, probably won't try and beat that 3.4. I said last year that, that 3.4 was a little hotter than we expected, so we'll probably be down a little bit there. And then I think of next summer, we're selling out of a larger mix of new communities, which will have lots of running room of premarketing for brand new product. If we can kind of sustain the sales basis on a sales per month that we had this year, that's how we would slightly move up that average. It really has to do with overcoming what we did in Q1 a year ago. Okay? Alex Barrón - Housing Research Center, LLC: Okay.

All right, on the gross margin side, I think -- I don't -- it's not out of respect, it's just because I got my hands full with our own company. So I don't spend too much time thinking about what other people are saying about gross margins. But I can tell you ours were lower than everybody else's for a long time. So for us to be moving up while they're moving down, is not inconceivable.

Our next question does come from Michael Kim of CRT Capital.

This first question's for Bob. I guess, the decision to tap the capital markets and free up that restricted cash in the balance sheet? What was the primary driver behind the decision? Was it more opportunistic in light of conditions in the capital markets, or really just driven by the land opportunities that you're seeing right now?

I think it was a little bit of both, Michael. There was an opportunity to tap the market for some longer-term capital at interesting rates. And we knew where we wanted to go with our land spend in the next year. We wanted to ensure that we had the capital to do it.

Yes. And, I guess, is it fair to say that you're pretty much set with 2014 land and you're kind of targeting 2015 and beyond? I mean, I guess, what's your targeted supply of land on hand for next year? Could you see something around like 6 years' supply of land or even something higher?

Well, the problem with that number is what's the numerator and what's the denominator, right?

Yes.

And we clearly hope to grow volumes in '15 and beyond by quite a bit. So I don't so much look at it on a year's basis. And also, it's tricky because some of our markets -- and we would not be unique to this. There are some markets where you've got to be in a 5-plus year context. There are other markets where you simply don't need to be. And so the mix of markets between builders makes that a bit of a tricky number. But I think your -- the first part of your question was exactly right. The land money that we're spending in '14 is developing lots that are available in '14 in the back half the year, but it's really about being set up for '15.

Okay, great. And with the sizable cash balance now, does this change your strategy at all in terms of the size of communities that you'd look at for future acquisitions? Or does it kind of open up more opportunities for you guys to take a look at?

We've actually been in a pretty good spot from a liquidity standpoint intentionally for a long time. And we shrunk the balance sheet a lot to kind of hoard liquidity. But when we made land buys, we weren't timid. And we've, this year, for the first time, in my memory at least, put out some press releases, not so much to affect the share price, but to let people know the kinds of things that we're doing. And if you look at the Miramonte community that we bought in Dallas, or the Wincopia community that we bought in Maryland or the River's Edge -- I just said it wrong.

River Village.

River Village in California. Sorry to our California team. Those are pretty big deals. Those are 8-digit deals in each instance. So we've been willing to do some bigger deals. And the problem is -- and the problem, the opportunity, we didn't chase small finished lot deals to juice unit activity in '13 or '14. We bought A-plus assets that were going to have year-plus development timelines, so that we could open up at the corner of Main and Main with a great, great asset. And it's created this headwind of community count for us, but I'm completely convinced that lessons from the downturn include buy good dirt, be in the right places. And you have to write bigger checks to do that, we're prepared to do that.

Our next question does come from David Goldberg of UBS.

I just wanted to ask a quick question, I didn't get in before. And it has to do with the community count expectations, both for fiscal '14, but then also in the 2B10 targets. And my question is how much of the community count growth is really coming from the land banking arrangements? And do you have any assumptions about those expanding within your targets and within your numbers? Or is that just kind of based on the current what's rolling out of the land bank versus what's been put in?

So the 120 that Bob spoke to that was committed by the land banks would be a single-digit number of communities, influencing '14 and '15, maybe a high single-digit kind of number. So it is not principally related to land banks. It's really -- we've got control of our destiny with our own spending, so it's really incremental. And I don't want say it's marginal, but it clearly is a much, much smaller component of the community count growth in '14. And I think that will be true as a part of 2B10 as well.

Is there a chance it could be bigger? Or is that just being conservative, or that's just kind of how you see the land purchasing going relative to on balance sheet versus off balance sheet as we go?

This is going to sound borderline boastful, but what I would tell you, David, is I don't feel capital-constrained on our land spending right now, between our balance sheet and the relationships that we've got. I think we have enormous firepower. What I feel constrained by are do prices make sense, and do we have the mental, physical, manpower, woman power capacity to underwrite, acquire, manage development and grand open successfully. I think that people part is a bigger restrictor on us right now than the capital.

Our last question does come from Joel Locker of FBN Securities.

Just a curious question on gross margin, obviously improving. But just was wondering if you had a pro forma gross margin on the land you purchased during the fourth quarter, assuming current ASP and absorption rates and direct cost going forward?

Yes, very low 20s.

Very low 20s, so similar to what you guys reported, that's pre-interest, right?

That is pre-interest.

Right.

All right. And then the corporate expense you've touched on is -- there is $3 million or so in onetime fees, call it. So do you think a run rate going forward is kind of around $33 million?

I think that's the right range. There will be a little pickup as the community count expands, but we're still going to get revenue leverage out of it, but as a baseline, I think that's a better run rate number.

And that's -- and the increase of -- the sequential increase of roughly $4 million, was that just maybe stock comp, because it's finally turning profitable or...

I'll be honest Joel, I can't tell you the stock comp number in the quarter. It's not very material, and I don't think it changed. I think, really, it was the roughly $3 million in issues related to some legacy warranty stuff.

That was principally it, Joel.

I know, but, I guess, the total increase was around $7 million, your $29.6 million to $36.4 million?

That's a little bit. That's higher than -- I don't have actually that specific number in front of me. But I think it was about $4.5 million, Joel.

$4.5 million. All right, just I didn't see the breakdown in the table you guys usually provide with the other one.

It's in the back. I think, in the appendix, isn't it, so -- okay. Well, Joel feel free to call us. We're happy to go through every line in the G&A with you.

That does conclude today's conference call. Thank you for attending. All participants may disconnect at this time.